What is SURE and why is the Commission proposing it?
The new instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) is designed to help protect jobs and workers affected by the coronavirus pandemic. It will provide financial assistance, in the form of loans granted on favourable terms from the EU to Member States, of up to €100 billion in total. These loans will assist Member States to address sudden increases in public expenditure to preserve employment. Specifically, these loans will help Member States to cover the costs directly related to the creation or extension of national short-time work schemes, and other similar measures they have put in place for the self-employed as a response to the current coronavirus pandemic.
What are short-time work schemes?
Short-time work schemes are programmes that under certain circumstances allow firms experiencing economic difficulties to temporarily reduce the hours worked by their employees, which are provided with public income support for the hours not worked. Similar schemes apply for income replacement for the self-employed.
SURE would provide additional EU support to finance Member States’ short-time work schemes, and other similar measures, helping to protect jobs.
All Member States already have some form of national short-time work schemes in place.
Why is the Commission focusing on supporting short-time work schemes?
The SURE instrument is just one element of the Commission’s comprehensive strategy to protect citizens and mitigate the pandemic’s severely negative socio-economic consequences.
Many businesses experiencing difficulties are being forced to temporarily suspend or substantially reduce their activities and the working hours of their employees. By avoiding wasteful redundancies, short-time work schemes can prevent a temporary shock from having more severe and long-lasting negative consequences on the economy and the labour market in Member States. This helps to sustain families’ incomes and preserve the productive capacity and human capital of enterprises and the economy as a whole.
How much funding will be available for the EU as a whole and for individual Member States?
Up to €100 billion in total financial assistance will be available to all Member States.
There are no pre-allocated envelopes for Member States.
How will the Commission secure and provide funding for the SURE instrument?
Financial assistance under the SURE instrument will take the form of a loan from the EU to the Member States that request support.
To finance the loans to Member States, the Commission will borrow on financial markets. The Commission would then provide the loans to Member States on favourable conditions. Member States would, therefore, benefit from the EU’s strong credit rating and low borrowing costs.
The loans will be underpinned by a system of voluntary guarantees from Member States committed to the EU. The instrument will start to function once all Member States have committed to those guarantees.
How will the conditions of each loan be decided?
These loans should be used by Member States to finance short-time work schemes for employees or similar measures for the self-employed.
Following a request by a Member State for financial assistance, the Commission would consult the Member State concerned to verify the extent of the increase in public expenditure that is directly related to the creation or extension of short-time work schemes and similar measures for self-employed. This consultation will help the Commission to properly evaluate the terms of the loan, including the amount, the maximum average maturity, pricing, and the technical modalities for implementation.
On the basis of the consultation, the Commission would present a proposal for a decision to the Council to provide financial assistance.
Once approved, the financial assistance will take the form of a loan from the European Union to the Member State requesting support.
How will the guarantee system work?
Loans provided to Member State under the SURE instrument would be underpinned by a system of voluntary guarantees from Member States. This will allow the Commission to expand the volume of loans that can be provided to Member States.
This guarantee system is necessary to achieve the necessary capacity while at the same time ensuring a prudent financing of the SURE instrument.
To this end, a minimum amount of committed guarantees (i.e. 25% of the maximum amount of loans of €100 billion) is needed.
How does this instrument relate to the previously announced European Unemployment Reinsurance Scheme?
In the Communication setting out its coordinated economic response to the coronavirus pandemic, the Commission committed to accelerating the preparation of its legislative proposal for a European Unemployment Reinsurance Scheme.
The SURE instrument is the emergency operationalisation of the European Unemployment Reinsurance Scheme and is designed specifically to respond immediately to the challenges presented by coronavirus pandemic.
It in no way precludes the establishment of a future permanent unemployment reinsurance scheme.
What are the next steps?
The Commission’s proposal for a SURE instrument will need to be swiftly approved by the Council.
The new instrument will be of a temporary nature. Its duration and scope are limited to tackling the consequences of the coronavirus pandemic.
African Development Bank launches record breaking $3 billion “Fight COVID-19” Social Bond
The African Development Bank (AAA) has raised an exceptional $3 billion in a three-year bond to help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and Africa’s economies.
The Fight Covid-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including Socially Responsible Investors, with bids exceeding $4.6 billion. This is the largest dollar denominated Social Bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank. It will pay an interest rate of 0.75%.
The African Development Bank Group is moving to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.
“These are critical times for Africa as it addresses the challenges resulting from the Coronavirus. The African Development Bank is taking bold measures to support African countries. This $3 billion Covid-19 bond issuance is the first part of our comprehensive response that will soon be announced. This is indeed the largest dollar social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” said Dr. Akinwumi Adesina, President of the African Development Bank Group.
The order book for this record-breaking bond highlights the scale of investor support, which the African Development Bank enjoys, said the arrangers.
“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank lives up to its huge responsibilities and deploys funds to assist and prepare the African population, through the financing of access to health and to all other essential goods, services and infrastructure,” said Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB.
Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on already fragile health systems.
It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it. Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession.
Commenting on the landmark transaction, George Sager, Executive Director, SSA Syndicate, Goldman Sachs said: “In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African continent’s fight against Covid-19. Not only that, but in the process, delivering their largest ever USD benchmark. A truly remarkable outcome both in terms of its purpose but also in terms of a USD financing”.
The Bank established its Social Bond framework in 2017 and raised the equivalent of $2 billion through issuances denominated in Euro and Norwegian krone. In 2018 the Bank was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.
“We are thankful for the exceptional level of interest the Fight Covid-19 Social Bond has raised across the world, as the African Development Bank moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained. Our Social bond program enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause,” said Hassatou Diop N’Sele, Treasurer, African Development Bank.
Fight Covid-19 was allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%). Final bond distribution statistics were as follows: Europe (37%), Americas (36%), Asia (17%) Africa (8%,) and Middle-East (1%).
Europe and Central Asia Ministers endorse new roadmap to reduce risk of disasters amid Covid-19 crisis
Governments across Europe and Central Asia have backed a roadmap towards preventing future disasters including new pandemics in the face of growing threats from climate change and disease outbreaks.
As Europe witnesses a resurgence of Covid-19 cases after a summer of lethal floods, forest fires, and disaster-induced displacement, ministers from 27 countries endorsed the 2021-2030 plan at the European Forum for Disaster Risk Reduction (EFDRR), hosted by the Government of Portugal and organised by the UN.
“This European Forum for Disaster Risk Reduction comes at an important moment, in the aftermath of COP26 in Glasgow,” said António Guterres, UN Secretary General.
“While Disaster Risk Reduction covers hazards that goes beyond climate, it is clear that the world will live with extreme weather events for generations to come.
“Prevention saves lives – and money. The Covid-19 pandemic, for example, could have been mitigated by an investment of billions instead of a response which is costing trillions.”
The roadmap sets out concrete priorities and actions to reduce disaster risk and losses as part of the Global Agreement on the Sendai Framework for Disaster Risk Reduction. These include strengthening national and local strategies to bolster a range of disaster risk, including pandemic preparedness in light of the lessons learned during the Covid-19 pandemic.
The roadmap also prioritises investment in critical infrastructure to protect against rapidly increasing climate risk, early warning systems to save more lives from disasters and working together to tackle cross border risk.
While demonstrating regional cooperation and solidarity, ministers participating in the Forum also outlined the commitments made at a national level to preventing future disasters.
Host Portugal emphasised how the Portuguese government and agencies have taken a proactive approach to manage disaster risk in the five years since the devastating wildfires of 2017, in which scores of people lost their lives, rather than react to disasters after they happen.
Eduardo Cabrita, Minister of Internal Affairs of Portugal, said: “We should act at the local level, at the national level, at the European level, and at the global level. This meeting comes at a critical moment in our region which is still impacted by the Covid-19 pandemic and is increasingly affected by climate change.”
“Europe and Central Asia has witnessed a growing number of disruptive events in recent years, from the Covid-19 pandemic to wildfires and flooding, many of which have been exacerbated by the worsening impacts of climate change,” said Mami Mizutori, UN Special Representative of the Secretary General for Disaster Risk Reduction.
“By supporting the EFDRR roadmap, European and Central Asian governments demonstrate their commitment to investing in prevention rather than risk exposure to the mounting costs of climate change and other hazards.”
According to the latest IPCC Report, extreme rainfall and flooding are projected to increase across most parts of Europe with a temperature increase of 1.5C. Under a 3C increase, the economic cost of future climate-related disasters is projected to be 15 times greater than it is today.
Extreme weather events have doubled over the last 20-year period when compared with the previous two decades, and every $1 invested in improving the resilience of critical infrastructure could save up to $4 in reconstruction
The EFDRR Roadmap 2021-2030 supports the Sendai Framework’s coordinated implementation for disaster risk reduction as well as the UN’s Sustainable Development Goals, which include climate action, and sustainable cities and communities.
Commission adopts contingency plan for food supply and food security in times of crisis
Following the COVID-19 crisis and as announced in the Farm to Fork Strategy, the EU intends to step up coordination at European level to ensure citizens do not face food shortages during crises. The contingency plan adopted today acknowledges the overall resilience of the EU food supply chain, identifies existing shortcomings, and puts forward actions to improve preparedness at EU level. To do this, the Commission will establish a European Food Security Crisis preparedness and response Mechanism (EFSCM), a group of food supply chain experts coordinated by the Commission to exchange data, practices and strengthen coordination.
Lessons learnt from the COVID-19 crisis
The COVID-19 crisis has shown the resilience of the agricultural, fisheries, aquaculture, and food sectors, avoiding that the health crisis also resulted in a food security crisis. To support these sectors, the EU took exceptional measures.
The Common Agricultural Policy (CAP) and the Common Fisheries Policy (CFP), for instance, provided tools to counter market imbalances or producers’ cash flow issues. Furthermore, to ensure the movement of goods and of essential workers in the single market, the Commission established green lanes and published guidelines that enabled close coordination between Member States for smooth border crossings.
Today’s Communication acknowledges that further improvement is needed in some areas to continue to ensure food supply and food security in times of crisis.
The EU contingency plan for food supply and food security
With the growing impact of climate change and environmental degradation on food production, as well as risks related to public health, cyber threats or geopolitical shifts threatening the functioning of the food supply chain, an EU contingency plan for food supply and food security is ever more relevant.
Key to improving EU preparedness, this contingency plan embraces a collaborative approach between all public and private parties being part of the food supply chain. From the private sector, this includes farmers, fishers, aquaculture producers, food processors, traders and retailers as well as transporters and logisticians for instance. EU, national and regional authorities will also be central to this plan.
The plan itself will be rolled out by the European Food Security Crisis preparedness and response Mechanism, to be launched by the Commission.
The EFSCM will rely on a group of experts, combining Member States and some non-EU countries representatives and actors from all stages of the food chain, and a set of rules of procedures governing its functioning. The group will meet periodically, and in the event of a crisis, at very short notice and as frequently as necessary.
It will focus on specific activities and a set of actions to be completed between mid-2022 and 2024:
- foresight, risk assessment and monitoring: improve preparedness by making use of available data (including on weather, climate, markets); further analysis of vulnerabilities and critical infrastructure of the food supply chain;
- coordination, cooperation and communication: sharing information, best practices, national contingency plans; development of recommendations to address crises; coordination and cooperation with the international community.
In May 2020, the Commission adopted the Farm to Fork and Biodiversity strategies. These two mutually reinforcing strategies were presented as core parts of the European Green Deal to enable the transition to sustainable food systems and to tackle the key drivers of biodiversity loss.
The Farm to Fork Strategy announced several important initiatives, including the contingency plan for ensuring food supply and food security in times of crisis and the adoption, by end of 2023, of a framework legislation for sustainable food systems, to further accelerate the transition towards a sustainable food system.
Conditions worsen for stranded migrants along Belarus-EU border
At least eight people have died along the border between Belarus and the European Union, where multiple groups of asylum-seekers, refugees and migrants have been stranded for weeks in increasingly dire conditions.
The UN Refugee Agency, UNHCR, appealed for urgent action on Friday, to save lives and prevent further suffering at the border with Latvia, Lithuania, and Poland. The latest casualty was reported within the past few days.
UNHCR warned that the situation will further and rapidly deteriorate as winter approaches, putting more lives in danger.
For the Agency’s Regional Director for Europe, Pascale Moreau, “when fundamental human rights are not protected, lives are at stake.”
“It is unacceptable that people have died, and the lives of others are precariously hanging in the balance. They are held hostage by a political stalemate which needs to be solved now,” he said.
According to media reports, the EU regards the increase in asylum seekers at the border, a direct result of Belarus, in effect, weaponizing migrants, in retaliation for sanctions placed on the Government over the suppression of the protest movement following last year’s disputed re-election of President Lukashenko.
Among those stranded are 32 Afghan women, men and children. They have been left in limbo between Poland and Belarus since mid-August, unable to access asylum and any form of assistance. They do not have proper shelter and no secure source of food or water.
A group of 16 Afghans tried to cross into Poland this week, but they were apprehended and not allowed to apply for asylum. They were also denied access to legal assistance. Within a few hours, they were pushed back across the border to Belarus.
So far, UNHCR has not been granted access to meet with the group from the Polish side, despite repeated requests, and only met them a few times from the Belarusian side to deliver life-saving aid.
The Agency has been advocating for the group to be granted asylum, since the Afghans have expressed their wish to settle either in Belarus or in Poland.
The request has been ignored by both sides. For UNHCR, that is “a clear violation of international refugee law and international human rights law.”
“We urge Belarus and Poland, as signatories to the 1951 Refugee Convention, to abide by their international legal obligations and provide access to asylum for those seeking it at their borders.
“Pushbacks, that deny access to territory and asylum, violate human rights in breach of international law”, said Mr. Moreau.
UNHCR urges the authorities to determine and address humanitarian and international protection needs, and find viable solutions. The agency also stands ready to support refugees, together with other relevant stakeholders.
“People must be able to exercise their rights where they are, be it in Belarus or in Poland or other EU States where they may be located. This must include the possibility to seek asylum, access to legal aid, information and appropriate accommodation”, Mr. Moreau concluded.
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